Tag Archives: local economic growth

As voters went to the polls once again on 4th May for the local elections, six combined authorities in England saw directly-elected metro mayors chosen for the first time, as part of the government’s devolution agenda.

The six areas – Cambridgeshire and Peterborough, Greater Manchester, Liverpool City Region, the Tees Valley, the West of England and the West Midlands – account for almost 20% of the population of England. This means a third of the English population, including London, now have a directly-elected metro mayor.

Advocates of the role believe metro mayors have the potential to transform both local democracy and local economies. However, not everyone is as supportive.

What are directly-elected metro mayors and what are their responsibilities?

Directly-elected metro mayors are chairs of their area’s combined authority, elected by the local population. Their role involves working in partnership with the combined authority to exercise the powers and functions devolved by central government, set out in the local area’s devolution deal. In contrast to existing city mayors, who are also directly elected, or local council leaders who make decisions for, and on behalf of, their local authorities, metro mayors have the power to make decisions for whole city regions.

The devolved powers predominantly focus on strategic matters, including housing and planning, skills, transport and economic development, with the exception of Greater Manchester, which also has powers and funding related to criminal justice and health and social care. Each devolution deal is very much tailored to the local area however, so the combined authorities will have varying powers and budgets.

The aim of metro mayors is to support local economic growth, while providing greater democratic accountability.

Concerns

While the government believes the role ensures clear accountability over devolved powers and funding, concerns have been voiced within local government itself about the accountability, effectiveness and necessity of the incoming combined authority mayors. And democratic support for the role has always been weak.

Their introduction has also been described as “potentially worrying” as the local people were never given the opportunity to have a say on the new roles and that, instead, they are products of ‘deals done behind closed doors between councillors and representatives of central government.’

It appears rather ironic that this proposal of greater devolution may actually reflect an imposition from central government of its own policies and desires on local government.

Nevertheless, the new metro mayors do enable greater local control over local matters and have been argued to represent the best chance yet of ensuring devolution is sustainable over time. It is also likely they will get increasing powers over time, as in London.

But the question remains whether they will facilitate local economic growth and help to re-balance the English economy.

Final thoughts

Whether the new metro mayors will succeed in this aim or not, only time will tell. There has been little evidence of improved performance under elected mayors in England so far, although it has been suggested there is some evidence that their introduction has resulted in quicker and more transparent decision-making, that the mayor had a higher public profile, that the council was better at dealing with complex issues, and that there was improved relationships between partners.

Some of the successes of the London mayor have also been suggested to be an indication of the potential impact of the directly-elected mayor role.

As has recently been argued, their success, or otherwise, “should be judged on whether they improve prospects for the people who live in their city regions, stimulating growth and getting local public services working better”.

If you enjoyed reading this, you may also like our previous articles ondevolution:

The principle of Business Improvement Districts (BIDs) is pretty straightforward, and the legislation in Scotland is flexible enough to ensure that pretty much anyone can create and act on a BID-based idea. There are currently over 30 live BID projects in Scotland, with BIDs Scotland stating in their latest annual report that they believe this number could almost double to 65 by the end of 2017 if upcoming and scheduled BIDs are also taken into account. The report found that, despite continuing tough economic conditions, there appears to be little evidence of a decline in interest in the BID model. If anything, more people are turning to BIDs as a way of improving local high streets using limited local funds, private investment from local businesses, and other local assets.

BIDs themselves can be seen as a cross section – a mix of the entire economic ecosystem of a place. They can encompass economic, business, local, political and social elements and bring them together in a strategic way to build revenue to support the different aspects of the BID area, including aesthetics, security and commerce. They are locally developed, locally managed, locally financed and locally delivered, giving a sense of authenticity which is becoming increasingly popular among consumers. This popularity is evidenced by the successful renewal of all of the BIDs in Scotland who have gone to reballot to date, with many actually increasing their majority in favour of the BID model.

Collaboration and embedding BIDS within their local communities

As BIDs have been developed, and new models, partnerships and ways of co- operating have been established, BID coordinators and councils in particular are thinking about how to ensure the legacy of the BID within their locality and, more importantly, how to ensure that the economic benefits of the BID are felt across the BID area, not just within the businesses.

This area-wide benefit can be created by for example, re-investing money in security, street lighting, Christmas lights, and flower baskets to improve the feel and aesthetics of a place – actions which are commonplace in BID areas. However, there are some who feel that BIDs could and should go even further in increasing their social value within a community, while not losing sight of the interests of levy payers. This balance, which requires recognition of the wider roles and responsibilities of BIDs, is something which will have to be carefully managed by BID managers in order to ensure that BIDs do not try to do too much, but at the same time act in a way which makes them a key part of their local community and economy. It is an interesting and, at times, difficult place for progressive BIDs to be.

In many areas, BIDs have provided an opportunity for increased community development, and it has been suggested that there could be a formal role for BIDs to play in the wider community development partnerships within localities. BIDs are now being developed to sit alongside existing community anchor bodies, helping to create strong local partnerships and independent communities.

Through collaboration and co-ordination, BIDs are working alongside other services and organisations to help develop sustained community empowerment, helping communities to lobby, providing work experience placements to local young people and acting positively in the form of events to promote increased community cohesion and empowerment, as well as continuing with “normal practice”- increasing footfall in their local area to benefit businesses.

Not all about the money

While generating additional income for the local economy is one of the biggest drivers of support for BIDs in communities, in some instances one of the biggest assets they bring to a community (especially once they are firmly established) is their leverage and collective bargaining power. They have the power to campaign and support other groups in the community on issues that are important to them, as well as offering greater bargaining power with local authorities or other businesses.

As well as commitment to the levy payers’ interest and to improving the local area for people living nearby, another of the potential roles of BIDs is not to act as direct income generators, but as catalysts or facilitators, to encourage new investment and wider growth beyond the BID area – to engage strategically with other partners to encourage investment.

Where next for BIDs

As we have already seen, the flexibility of the BID model in Scotland (there are some legislative differences in England) is such that groups may only be limited by their own ambition. Currently Scotland has what is thought to be the world first food and drinks BID and the first tourism BID this side of the Atlantic. Another innovation is the Borders Railway BID, which seeks to maximise the collective benefit to businesses that are located along the railway route.

It has been suggested that the BID model could be used in a more flexible way to generate income for other public service projects, including the suggestion of a BID for health and a BID for schools. Although the intricacies of how these would work in practice are still being considered, there is much that can be taken from how the existing models use community empowerment, and engagement between the public, third and private sectors to create sustainable and inclusive local economic growth in an area.

As well as their commercial enterprising side, BIDs are also realising their potential as agents of community development and improvement beyond that of economic input. The future currently looks bright for BIDs, which will hopefully mean that it also looks brighter for our local communities.

Business Improvement Districts Scotland is the national organisation for BIDs in Scotland, providing support, advice and encouragement to business groups, communities and local authorities considering and developing a business improvement district.

BIDs Scotland held its Annual Gathering on 28th March 2017 at Perth Concert Hall with the theme of People – Place – Business: Business Improvement Districts – the key to economic growth.

Follow us on Twitterto see what developments in public and social policy are interesting our research team. If you enjoyed this article, you may also be interested in our other article on BIDs.

With the economic performance of cities and regions increasingly reliant on the skills of their workforce, the longstanding issue of graduate ‘brain drain’ to London and the south is something that needs to be addressed.

Although students attend many of the universities spread across the country, a significant number of graduates flock towards the capital at the end of their studies. According to a recent report from Centre for Cities, this deprives other cities of skilled workers and essentially damages the overall economy.

The evidence

A quarter of all new graduates in 2014 and 2015 were found to have moved to work in London within the six months of finishing their degree. And the highest achievers make up a significant proportion. While London accounts for around 19% of all jobs, of the graduates that moved city six months after graduation London employed 22% of all working new graduates, and 38% of those with a first or upper second class degree from a Russell Group university.

Although most cities experience an overall graduate gain, cities outside London don’t retain the majority of students that move to their city to study – the ‘bouncers’ that drive the brain drain overall, overshadowing any gain:

Manchester lost 67% of these students upon graduation;

Birmingham lost 76%; and

Southampton lost 86%.

Other figures show that 310,000 graduates have left the north in the past decade, contributing to a net average deficit of 7,500 highly qualified workers leaving annually, or 75,500 over a decade.

Northern regions have to some extent offset the effect of local brain drain by attracting enough highly qualified foreign workers to fill the gap. But with reductions in immigration, these regions could be left lacking.

Given the UK’s current position regarding the EU, concerns have also been raised over whether Britain faces a further brain drain of academics to Europe, following Brexit. A recent survey highlighted that 42% of academics said they are more likely to consider leaving Britain after the vote to leave.

Why?

While it may seem plausible to assume that higher salaries are the reason for this brain drain, it appears that the main pull for graduates is the availability of jobs and career progression, which London’s vast labour market offers.

However, as recent research from Homes for the North has identified, these are not the only reasons. It highlights the importance of additional non-work drivers of graduate location decisions, including the cost and quality of housing, quality of local amenities and the prospect of home ownership.

Of the graduates polled, 80% said the quality of housing was important, while more than 60% said the cost of housing was important. The quality of green spaces and local amenities was also deemed important by over 60% of graduates.

What can be done to redress the balance?

There have been numerous graduate retention initiatives at the local and regional level aimed at tackling the uneven distribution of graduates, such as graduate wage subsidies and local graduate job matching. But it seems little has improved. The Centre for Cities research argues that these alone will not tackle the root cause of the graduate brain drain.

It suggests that cities themselves have a vital role to play in ensuring the local job market offers an appropriate number of graduate job opportunities that will allow them to both retain graduates and attract graduates from elsewhere. Policy should therefore broaden its focus to improve local economies by investing in transport, housing and enterprise, rather than focusing solely on graduate retention and attraction policies.

The chief executive of the Centre for Cities commented that the government’s new economic and industrial strategy should be used to strengthen existing devolution deals for city-regions such as Greater Manchester, extending their scope to grow.

Indeed, the industrial strategy green paper, published in January, clearly places emphasis on addressing the economic imbalances across the UK through a number of measures, such as working with local areas to close the skills gap, including new schemes to support the retention and attraction of graduates. However, the strategy has been criticised for providing little clarity on how regional rebalancing and sectoral deals will work in practice.

Final thoughts

While it appears clear that cities outside London need to improve their graduate offer with better job prospects, the evidence on graduate migration suggests it is more complex than this.

As has been argued, the provision of good quality affordable housing could play a role alongside high-skilled job creation and opportunities. With the cost of living in London so expensive, this would make sense, particularly as the average graduate salary in London is not that much higher than the average across other UK cities.

Follow us on Twitter to see what developments in public and social policy are interesting our research team.

The Local Government Association (LGA) last week called for greater devolution of employment and skills funding to councils and a ‘radical rethink’ of the way Jobcentre Plus works. Chairman of the LGA’s People and Places Board said:

“Job centres need to engage with more unemployed people for a start and then help more claimants move into sustainable employment. This is crucial to boosting local growth. Councils know best how to do this. We know our local economies, we know our local employers and we know our residents and we can bring local services together in a way central government will never be able to.”

Local solutions

Of course, local solutions for job creation and economic growth is not a new idea. Local development and job creation initiatives first emerged in the 1980s, in response to a ‘new phenomenon of high, persistent and concentrated unemployment’ that national policies seemed powerless to reverse on their own. Since then they have continued to spread and develop.

Although unemployment is at an 11-year low in the UK, according to recent research many countries, including the UK, are seeing widening gaps in the geographic distribution of skills and jobs. And the importance of local solutions has again been highlighted.

The OECD’s most recent edition of Job Creation and Local Economic Development argues that local development is a key tool for addressing the problem of such unequal distribution. Similarly, in its submission to last year’s Autumn Statement, the LGA argued that local government is central to the delivery of locally tailored solutions to national public policy challenges.

Boosting productivity growth, while ensuring growth delivers improved living standards and distributes the benefits of increased prosperity equally, are highlighted by the OECD as the twin challenges facing all policymakers. Underlined as a crucial but difficult task, it is argued that ‘actions originating at any single governance level or policy area will not be sufficient’.

Whole-of-government approach

The OECD report, therefore, examines how national and local actors can better work together to support economic development and job creation at the local level. In particular, it outlines what both national and local actors can do to improve the local implementation of vocational education and training (VET) and SME and entrepreneurship policies.

Among the recommendations for national actors include:

Design VET frameworks that allow local stakeholders to tailor training to local labour market needs while still maintaining a certain level of national consistency

Build the capacities needed to make VET systems more agile locally

Develop a strong national apprenticeship framework that builds a high quality system, includes strategically-designed incentives for employer participation, and allows for flexible delivery frameworks

Maximise the efficiency of SME and entrepreneurship policy delivery by allowing for local tailoring, co-locating services, using intermediary organisations to deliver programmes, and/or developing formal agreements for the division of competences and financing between governance levels

Develop national frameworks and strategies to support disadvantaged young people in entrepreneurship, and clearly assign responsibility for this policy portfolio to a single agency or ministry

Embed entrepreneurship into national education frameworks, while also providing integrated packages of entrepreneurship support in other settings to reach young people outside of the education system

Among the recommendations for local actors include:

Balance the need to meet pressing local labour market demands with ensuring that VET helps to move local economies to higher skilled and value-added products and services

Encourage VET teachers and trainers to maintain contact with local employers and industries to keep their skills and knowledge up-to-date

Boost employer engagement in apprenticeships

Tailor the delivery of apprenticeship programmes so that they work better for a broader range of employers, including SMEs, and disadvantaged populations

Forge connections across administrative borders in developing and co-ordinating entrepreneurship and SME policies

Work with organisations that have already established relationships with disadvantaged youth to maximise the reach of entrepreneurship programmes

Following the abolition of the Regional Development Agencies in 2010, 39 local enterprise partnerships (LEPs) were established in England by 2012. Each was designed to represent a functional economic area and steer growth strategically in local communities. These business-led partnerships between the private sector and local authorities are central to government plans for local economic growth.

According to a new report from the National Audit Office (NAO), the role and remit of LEPs has expanded both significantly and rapidly but there are concerns over whether they have the capacity and capability to deliver.

Rapid growth

Since their inception, LEPs have rapidly developed from new start-up organisations to bidders and delivery managers for substantial amounts of national and European funding initiatives to strategic leaders of their local economies.

Between 2010 and 2015 total central government funding directed through LEPs was approximately £1.5 billion. Through the Local Growth Fund, £12 billion will be available from 2015-16 to 2020-21. Growth Deals were agreed with each of the 39 LEPs in 2014, through which £6.3 billion of the Local Growth Fund was allocated. With a further £1 billion allocated in January 2015, the total to date is £7.3 billion. LEPs estimate that the Growth Deals combined will create up to 419,500 jobs and 224,300 housing units.

On the whole, LEPs have been perceived positively and are well established as the main agencies for promoting local growth.

Development has been anything but uniform, however, with a varied pace of evolution. Considering the differing levels of size, urbanisation, population, and existing infrastructure within the LEPs, this is no surprise.

The most advanced LEPs have been identified as those with a history of collaborative working. Greater Manchester leads the way, having already been given powers over skills, welfare and transport, and to be given new powers over the criminal justice system as announced in the 2016 Budget. Greater Manchester has been working in partnership since the 1980s through its local government association, and formally through its Combined Authority since 2011.

And according to a recent Localis report, including London, there are at least a third of LEPs based in and around urban areas which are or could soon be in a position to take on greater powers, with 2017/18 a feasible timeline for them to assume greater powers.

Uncertainty

Despite their rapid development and increased responsibility for substantial amounts of government funding, concerns have been raised over LEPs’ power, resources and accountability.

The NAO report found that only 5% of LEPs agreed that resources available to them are enough to meet government expectations. Additionally, 69% of LEPs reported that they did not have sufficient staff and 28% did not think that they had sufficiently skilled staff.

A survey by the Federation of Small Businesses in 2014 found that: there is a disparity in the levels of funding and capacity across LEPs; a lack of clarity on the remit, purpose and function of LEPs from government has resulted in widespread misunderstanding and friction in practice; and inconsistencies in performance monitoring across LEPs is hampering accountability to local stakeholders and hindering assessment of LEP performance nationally.

Further recent analysis argues that their role and influence are being compromised by a fragmented and changing landscape of economic development governance and the absence of any longer term vision and plan for their evolution.

Given this lack of long term vision and strategy, the fundamental tensions yet to be resolved and their institutional shortfalls and limitations in authority, accountability, capability and resources, the analysis concludes that many LEPs will struggle to exercise substantive influence on economic development at the local level.

Indeed, LEPs reported to the NAO that they were uncertain about their place in the wider devolved landscape. LEPs were also concerned that the government had not made clear their role in economic planning and development as devolution progresses.

Further concerns were raised over funding in terms of pressure to spend their allocation within the year at the risk of not receiving future funding, which could potentially lead to LEPs not funding projects most suited to long-term economic development. And the sustainability of reliance on local authority support at a time of reduced local government funding was another worry.

Future direction

Going forward, the NAO report recommends that the government:

clarifies how LEPs fit with other bodies to which it is devolving power and spending

distributes Local Growth Funding to LEPs in a form that will give them medium to long-term funding flexibility, subject to performance, to reduce risk of funds being spent on projects that LEPs do not regard as offering the best value for money

sets out specific quantifiable objectives and performance indicators for the success of Growth Deals

ensures that there is sufficient local capacity within LEPs to deliver Growth Deals by taking a more explicit and consistent account of the financial sustainability of local authority partners

uses its approach to monitoring Growth Deals as an opportunity to standardise output metrics for future local growth initiatives, allowing for comparative performance assessment and reducing reporting burdens

tests the implementation of local assurance frameworks before confirming future funding allocations, and works with LEPs to ensure that the required standards of governance and transparency are being met.

Only time will tell whether the government expectation of LEPs to deliver Growth Deals effectively and sustainably will become a reality.

“If you want to build a world class city, build a great university and wait 200 years” (Daniel Patrick Moynihan in the 1960s)

The evolution of cities, and the rise and fall in their populations, is nothing new. For hundreds of years, people have moved in order to seek opportunities for themselves and their families, and with these population shifts come new challenges. Within the UK, we have seen the industrialisation of the 19th century (and rapid urbanisation) give way to post-industrial decline and the magnet effect of London and the South East, attracting jobs, investment and higher skilled workers.

Earlier this week I attended a talk by Bill Kistler of the Urban Innovation Network which looked at city competitiveness and specifically, the potential contribution of universities.

Survival of the fittest?

Work such as A century of cities has highlighted that to be successful, cities must adapt by reinventing their economies. Understanding how cities compete (regionally, nationally and internationally) in order to sustain their populations and economies, and if necessary stimulate renewal, has also been brought to the fore by the current devolution agenda.

Universities are ‘anchor institutions’ – organisations whose characteristics include spatial immobility, large size and strategic contribution to the local economy as purchaser and employer. And so far this year, BIS, the Centre for Local Economic Strategies and Universities UK have all published reports looking at anchor institutions and the role of universities in economic development. This builds on the Witty Review of 2013 which argued that universities “have an extraordinary potential to enhance economic growth”.

The Glasgow story

Within the context of Glasgow, there is a strong imperative to address these challenges. In 2005, the six parliamentary constituencies with the highest rates of premature mortality in the UK were in Glasgow. Programmes such as GoWell have been working to assess the effects of ongoing regeneration on area-based health and social inequalities. And £24m funding from the Technology Strategy Board (now Innovate UK) has been used to develop the Future City Glasgow project, using open data and technology to improve the lives of citizens.

Now there is another major opportunity to leverage change – the University of Glasgow’s planned campus refurbishment and expansion into the former Western Infirmary site is estimated to represent investment of up to three quarters of a billion pounds over the next decade. How this investment can be used to benefit the wider city is therefore a pertinent question.

Universities in place-making

Kistler argued strongly that universities are not separate entities but part of the fabric of the city. They are bound together in a shared destiny, as human and intellectual capital is fundamental to city competitiveness. It is also a reciprocal relationship – just as students make decisions on where to study based on various factors including quality of life, quality of the university and the labour market capacity of the area, so do graduates and employers make decisions on where to base themselves.

Universities can offer a chance to redefine places – recent examples from around the world of universities which have used expansion or investment as a catalyst for the revitalisation of their local area include for example, the innovation district Stockholm Life, the Campus Diagonal-Besòs hub development in Barcelona, and the University of the Arts London relocation to Kings Cross and Elephant and Castle as part of wider regeneration plans.

Opportunity or obligation?

As discussed during the event Q&A however, universities also have a social obligation to ensure that they use their position to address inequalities and ensure that economic benefits are distributed across a city. As we’ve previously pointed out in relation to the Core Cities devolution agenda, the rhetoric around growth has a tendency to focus on infrastructure and macroeconomics – ignoring social challenges such as skills, poverty and under-achievement. There are also real risks of negative consequences of gentrification and the crowding out of lower skilled roles by underemployed graduates.

Universities (and cities) operate in a strange dynamic of both competition and cooperation with their neighbours. Building a world class city, or even creating a city where people want to work and live, is not a passive process. Rather than ‘building and waiting’ (in Moynihan’s words), local authorities, business, the third sector and education institutions must jointly develop a long-term strategic vision. And part of that conversation has to be about considering who the winners and losers might be.

They control combined budgets of over £10bn, deliver 24.4% of the combined economic output of England, Scotland and Wales, and are home to over 21 million people. What are they? The Core Cities of the UK – and as pre-election lobbying ramps up a gear they are at the forefront of the devolution debate.

Last week I attended the Core Cities Devolution Summit. This event, hosted in Glasgow, marked the launch of a modern charter for local freedom. It also gave those interested in the current cities agenda a chance to hear from the city leaders on the potential benefits of reform.

I won’t summarise the charter, or the main recommendations of a new report from ResPublica which argues for the fullest possible devolution of public spending and tax raising powers to the UK’s largest cities and city regions. Instead, here are a few reflections on the day.

Bespoke devolution

The hype over Manchester’s recent devolution agreement with the Treasury shouldn’t distract from the fact that devolution is not a one-size-fits-all model. The idea isn’t to try and mimic Manchester’s journey – what’s on the cards is an approach that takes account of local circumstances.

I’m not sure that the end result of this – potentially radically different priorities in revenue generation, service delivery and spending between neighbouring metropolitan areas – is being communicated in a transparent way. Ben Page from IpsosMori shared some interesting survey results which suggest that public opinion also lags behind the political agenda:

Leadership not bureaucracy

Mention devolution and one of the immediate responses of naysayers is to complain it’s just yet another layer of governance – more costs, more staff, more vested interests. This was raised during Q&A and the panel responded by saying that what they are proposing doesn’t require massive reorganisation – it’s about effective leadership. The same pots of money are used but funds can be accessed in different ways for different purposes.

This was only half-convincing. Repeated reference to place-based decision-making (breaking down functional /organisational silos to ensure services are focused on outcomes and those residents with complex needs) didn’t really explain how you build the trust and political capacity that’s needed to roll out transformation across multiple agencies/workforces at the same speed and scale.

Equalities

Presenting a different perspective on the day was Professor Lesley Sawers, who highlighted the risks of unintended consequences from devolution in terms of social justice and inequalities. She argued that so far localism has led to an approach to investment that has not been particularly effective in tackling equalities issues.

Cities should be great agents of social reform but the rhetoric around growth has a tendency to focus on infrastructure and macroeconomics – ignoring social challenges such as skills, poverty and under-achievement. And it may seem an easy point to score, but running an event with only 3 female speakers out of 25, didn’t really send a great message to observers. Don’t even mention the lack of ethnic diversity on the platform.

What now?

The devolution agenda may be the ‘only show in town’ but whether the core cities can take advantage of this to benefit and engage their own populations remains to be seen.

The Idox Information Service has a wealth of research reports, articles and case studies on governance and city regions. Members receive regular briefings as well as access to our Ask a Researcher enquiry service.